IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2011-072.html
   My bibliography  Save this paper

“An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?”

Author

Listed:
  • Nicoletta Batini
  • Julia Guerreiro
  • Giovanni Callegari

Abstract

This paper updates existing measures of the U.S. fiscal gap to include federal laws up to and including the mid-December 2010 federal fiscal stimulus. It then applies the methodology of generational accounting to establish how the burden of adjustment required to attain fiscal sustainability is shared across generations. We find that the U.S. fiscal and generational imbalances are large under plausible parametric assumptions, and, while not much affected by the financial crisis, they have not improved much by the passing of the Final Healthcare Legislation. We find that, under our baseline scenario, a full elimination of the fiscal and generational imbalances would require all taxes to go up and all transfers to be cut immediately and permanently by 35 percent. A delay in the adjustment makes it more costly.

Suggested Citation

  • Nicoletta Batini & Julia Guerreiro & Giovanni Callegari, 2011. "“An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?”," IMF Working Papers 2011/072, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2011/072
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=24770
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Congressional Budget Office, 2010. "The Long-Term Budget Outlook," Reports 21546, Congressional Budget Office.
    2. repec:cbo:report:418806 is not listed on IDEAS
    3. Congressional Budget Office, 2010. "The Budget and Economic Outlook: Fiscal Years 2010 to 2020," Reports 41880, Congressional Budget Office.
    4. repec:cbo:report:418804 is not listed on IDEAS
    5. Congressional Budget Office, 2010. "An Analysis of the President's Budgetary Proposals for Fiscal Year 2011," Reports 21252, Congressional Budget Office.
    6. repec:cbo:report:418805 is not listed on IDEAS
    7. Congressional Budget Office, 2010. "The Budget and Economic Outlook: Fiscal Years 2010 to 2020," Reports 41880, Congressional Budget Office.
    8. Congressional Budget Office, 2010. "The Budget and Economic Outlook: Fiscal Years 2010 to 2020," Reports 41880, Congressional Budget Office.
    9. repec:cbo:report:215461 is not listed on IDEAS
    10. Congressional Budget Office, 2010. "The Budget and Economic Outlook: Fiscal Years 2010 to 2020," Reports 41880, Congressional Budget Office.
    11. repec:cbo:report:418807 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michal Franta & Jan Libich & Petr Stehlík, 2018. "Tracking Monetary-Fiscal Interactions across Time and Space," International Journal of Central Banking, International Journal of Central Banking, vol. 14(3), pages 167-227, June.
    2. David McCarthy, 2021. "80 will be the new 70: Old‐age mortality postponement in the United States and its likely effect on the finances of the OASI program," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(2), pages 381-412, June.
    3. Libich, Jan & Nguyen, Dat Thanh & Stehlík, Petr, 2015. "Monetary exit and fiscal spillovers," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 184-206.
    4. Bertrand Gruss & Mr. Jose L. Torres, 2012. "Macroeconomic and Welfare Costs of U.S. Fiscal Imbalances," IMF Working Papers 2012/038, International Monetary Fund.
    5. Hsieh, Kevin Yu-Ching & Tung, An-Chi, 2016. "Taiwan’s National Pension Program: A remedy for rapid population aging?," The Journal of the Economics of Ageing, Elsevier, vol. 8(C), pages 52-66.
    6. Ben-Gad, M., 2012. "On deficit bias and immigration," Working Papers 12/09, Department of Economics, City University London.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gerhards, Eva & Goerl, Caroline-Antonia & Thöne, Michael, 2012. "Tragfähigkeit der öffentlichen Finanzen: Eine Bestandsaufnahme national und international praktizierter Methoden der langfristigen Budgetanalyse [Sustainability of Public Finances: A review of inte," FiFo Reports - FiFo-Berichte 14, University of Cologne, FiFo Institute for Public Economics.
    2. Jorgenson, Dale W. & Goettle, Richard J. & Ho, Mun S. & Wilcoxen, Peter J., 2013. "Energy, the Environment and US Economic Growth," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 477-552, Elsevier.
    3. Daniel J. Wilson, 2010. "Fiscal spending multipliers: evidence from the 2009 American Recovery and Reinvestment Act," Working Paper Series 2010-17, Federal Reserve Bank of San Francisco.
    4. Dimitri B. Papadimitriou & Greg Hannsgen, 2010. "Debts, Deficits, Economic Recovery, and the U.S. Government," Economics Public Policy Brief Archive ppb_114, Levy Economics Institute.
    5. Willem Van Zandweghe, 2010. "Why have the dynamics of labor productivity changed?," Economic Review, Federal Reserve Bank of Kansas City, vol. 95(Q III), pages 5-30.
    6. Peter Boone & Simon Johnson, 2014. "Forty Years of Leverage: What Have We Learned about Sovereign Debt?," American Economic Review, American Economic Association, vol. 104(5), pages 266-271, May.
    7. Fischer, Carolyn & Fox, Alan K., 2012. "Climate policy and fiscal constraints: Do tax interactions outweigh carbon leakage?," Energy Economics, Elsevier, vol. 34(S2), pages 218-227.
    8. Toptancı, Ali İskan, 2021. "RETRACTED PAPER: "The Effects of Protectionism Developed after the Great Depression on Global Trade: A Macroeconomic Analysis"," EconStor Research Reports 228521, ZBW - Leibniz Information Centre for Economics.
    9. William R. Cline, 2014. "Sustainability of Public Debt in the United States and Japan," Working Paper Series WP14-9, Peterson Institute for International Economics.
    10. Ufuk Demiroglu, 2013. "The Effects of the Investment Decline on Potential GDP in Turkey’s 2001 and 2009 Crises," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 13(3), pages 25-44.
    11. International Monetary Fund, 2010. "United States: Selected Issues Paper," IMF Staff Country Reports 2010/248, International Monetary Fund.
    12. Knapek, George M. & Richardson, James W. & Outlaw, Joe L. & Raulston, J. Marc, 2011. "Investigating the Redundancies in Current Farm Programs," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas 98841, Southern Agricultural Economics Association.
    13. Davig, Troy & Leeper, Eric M. & Walker, Todd B., 2011. "Inflation and the fiscal limit," European Economic Review, Elsevier, vol. 55(1), pages 31-47, January.
    14. Polito, Vito & Wickens, Mike, 2014. "Modelling the U.S. sovereign credit rating," Journal of Banking & Finance, Elsevier, vol. 46(C), pages 202-218.
    15. Eric M. Leeper, 2013. "Fiscal Limits and Monetary Policy," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 13(2), pages 33-58.
    16. Martin Feldstein, 2011. "Preventing a National Debt Explosion," Tax Policy and the Economy, University of Chicago Press, vol. 25(1), pages 109-144.
    17. Parry, Ian W.H. & Williams, Roberton C., 2011. "Moving U.S. Climate Policy Forward: Are Carbon Taxes the Only Good Alternative?," RFF Working Paper Series dp-11-02, Resources for the Future.
    18. Hu, Ruiyang & Zarazaga, Carlos E., 2018. "Fiscal stabilization and the credibility of the U.S. budget sequestration spending austerity," Journal of Economic Dynamics and Control, Elsevier, vol. 93(C), pages 54-66.
    19. Eric M. Leeper, 2009. "Anchoring fiscal expectations," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 72, pages 17-42, September.
    20. Douglas Sutherland & Peter Hoeller & Rossana Merola, 2012. "Fiscal Consolidation: Part 1. How Much is Needed and How to Reduce Debt to a Prudent Level?," OECD Economics Department Working Papers 932, OECD Publishing.

    More about this item

    Keywords

    WP; present value; GDP;
    All these keywords.

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2011/072. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.